ML20062B743

Forwards Addl Financial Info for Forthcoming NRC Rept Re Application.Info Revises Data in Schedule 3A,submitted on 780310

ML20062B743
Person / Time
Site:	Davis Besse
Issue date:	10/23/1978
From:	Roe L TOLEDO EDISON CO.
To:	Kniel K Office of Nuclear Reactor Regulation
References
2-136, NUDOCS 7811010066
Download: ML20062B743 (5)

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October 23, 1978

%ME EDISON CFIlCE GF TrE SEC.E i!,W:

D.C.

LOWELL E. ROE i

vie. em Docket Nos 50-500 and 50-501 y

Serial No. 2-136 f,

Director of Nuclear Reactor Regulation

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Attention Mr. Karl Kniel, Chief

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Light Water Reactors, Branch No. 2 Division of Project Management United State.s Nuclear Regulatory Commission h'

Washington, D.C.

20555 Gentlemen:

This letter is in response to the telephone advice of Mr. Benedict that l

certain financial information of two of the applicants, The Toledo Edison Company and Duquesne Light Company, required clarification or additional information prior to the report of the NRC being issued on this matter.

The question regarding the applicant Toledo Edison was directed to a recon-

"ciliation of certain data on schedule 3a submitted on March 10, 1978. The applicant advises that its interpretation of the preparation of schedule 3a was :o display the total funds from internally generated cash and external financing required to meet the construction program and display the other capital requirements separately. This form of presentation is a net financ-ing basis.

The NRC has advised that this presentation should be on a gross l

? basis. Toledo Edison is re-submitting schedule 3a to reflect the external financing on a gross basis.

The information previously requested as propri-etary has not been revised and is not being re-submitted.

The question regarding the applicant Duquesne Light regarded the ability of the applicant to e eet its obligations with the assumptions made. Duquesne 1.

Light has revised and clarified certain assumttions and is,,r.e.=subm&+eing-----

lie con _e 3a and the related_assmptiona 4*Certain pofEions of the information I schedul sidere7 to7 e proprietary information.

This proprietary information /

is submitted with this letter together with the affidavit to withhold this

, uformation from public disclosure aa ne_quig bygubgragaMb)(1) of, I e

Section 2.790 of 10 CFR Part 1 de five enoies of the remmend information g being submitted under 'iIeparate cover have the proprietary information deletecT.

If you have any questions regarding this submittal, please contact me.

Very truly y:urs, h0PRitTAR'( VEES 00 Ow)TE'OLLfD o

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& b 86TW.lG UT G h $ 2 A4 ATELY

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7811010tb6

,LER:GMH.r THE TOLEDO EDISON COMPANY EDISON PLAZA 300 MADISON AVENUE TOLEDO, OHIO 43652

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'f ATTAODIENT FOR ITEM NO. 3.a.

f Applicants Toledo Edison Ihsclear Flaatt Davis-tesse Unite II & III PRO FURMA SOURCES OF FUNOS Foe SYSTRM-WIDE CONSTRUCTION EXPENDITURES AND CAPITAL STRUCTURE DURING PERIOD OF CONSTRUCTION OF SUBJECT NUr t ras povEn pgmty (Millions of Dollare) a Construction Years of Subject Nuetear Fouer Flaat 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 EXTERNAL FINANCING Common Stock

$ 48.0

$ 54.6

$ 49.3

$ 27.9

$ 0.0

$ 0.0

$ 0.0

$ 0.0

$ 0.0

$ 0.0 Przferred Stock 0.0 30.0 25.0 25.0 25.0 0.0 0.0 0.0 0.0 0.0 ton 8-Tera Debt 75.0 85.0 110.

65.0 110.0 45.0 85.0 90.0 0.0 0.0 Notes Payable 0.2 (0.6) 0.7 (4.53 (4.3)

(1.1) 22.1 0.9 (0.5)

(22.5)

Coottsbuttone from Ferent-Net 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 other Funda (describe)

(0.4) 2.1 (0.3)

(0.3)

(0.3)

Total Esternal Funde

$122.8

$171.1 SC

$113.1 WG

$ 4{0.9)

W

$ 90.6 8 (0.9)

$(36.4) 0.1 10.3)

(0.4)

Lt1.9) 3.0 k INTERNALLY CENERATED CASN aj, Net lacame g-ises: Preferred Dividende e-Cneonna Dieideade

[ Betateed Earnings 7.9 12.0 '

23.8 32.5 32.9 33.6 34.6 37.2 35.2 35.4 Deferred fases 11.7 10.6 11.0 13.2 23.4 18.8 (0.9) 9.3 9.0 7.8 Iweet. Tas Cred.-Deferred 14.3 11.7 12.0 15.2 25.8 21.8 2.4 12.8 12.8 12.0 Depreciation and Amort.

35.4 37.0 38.8 42.5 55.2 62.2 67.3 74.3 85.5 96.0 Chan8e la Working copstal 13.6 (6.4) 9.1 (0.2)

(2.5) 11.6 33.3 13.7 16.2 27.2 Issat AFDC (21.7)

(35.7)

(48.5)

.(48.8)

(40.0)

,141.8)

(44.8)

(48.1)

(38.4)

(27.1)

Total Internal Fundo 61.2 29.2 46.2 54.4 94.8 10C2 91.9 99.2 120.3 153.3 ftTIAL FUNDS

$184.0 TRCi Tns.1

$i67.5

$225.2

$t49.2 Si,,. I

$i8,.8

$ti,.*

$ii4.9 t

CrNtSTRUCTION EXPFNDITURESe i

Nuclear Power Flante

$ 96.7

$116.0

$146.9

$133.3

$144.1

$115.2

$134.9

$ 98.4

$ 67.8 8 72.9 ot her 83.3 82.3 46.5 34.2 41.1 34.0 46.2 41.4 36.6 42.0 Total Coast. Esp's.

$180.0 Ti9 D

$i93.4

t67.5

$i85.2

$i49.2

$i85.1

$13,.8

$iO4.4 Siin.9 j

Subject ihoclear Plant M

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OTHER CAPITAL REQUIREMFJrTS 8

sef.emption of Maturing sonda 4.0 2.0 37.5 0.0 40.0 0.0 14.0 50.0 15.0 0.0 Acquiettice of Bonde for Sinkieg j

Funde 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Miscellaneous Requiremente (detail) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL CAPITAL REQUIREMFNTS M3

$200.3

$230.9

$167.5

$225.2

$149.2

$199.1

$189.8

$119.4

$114.9 CAPITAL STSUCTURE ($ & Il tons-Term Debt S 570 Sit S 653 502

$ 725 491

$ 790 492 8 860 492 8 898 501

$ 963 501 8 996 501

$ 974 493

$ 968 481

• Prsferred Stock 160 14 189-15 214 15 238 15 263 15 263 14 262 14 261 13 261 13 260 13 Caseson Equity 383 35 450 35 523 36 584. 36

_ 616 36 450 36 684 36 722 37 757 38 792 39 TOTAL

$1,113 100!

$1,292 1001

_$_I.462 1001

$1,612 1001

$1, H9 1002

$1,431 3001

$1.909 100%

$1,979 1002

$1,992 1001

$2.020 1001 i

NOTE: The ability to generate laternal fundo as projected above le dependent upon adequate and ties rate relief. The data submitted is subject to elselficant thange as the future outlook changes and is submitted only for the purposes.of this application before the Nuclear Re8ulatory l

Commiselon and is not intended to be used la connection with any sale or purchase of ary securities.

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REQUEST FOR ADDITIONAL FINANCIAL INFORMATION DAVIS-BESSE NUCLEAR POWER STATION UNIT NOS. 2 AND 3

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DOCKET NOS. 50-500 AND 50-501 iiL M

ATTACHMENT FOR ITEM NO. 3a

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M h) 3a.

Complete the attached schedule entitled, " Sources of Funds for System-Wide Construction Expenditures During Period of Construction of Subject

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Nuclear Power Plant," through the year of earliest estimated completion

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of Unit No. 3.

Indicate the assumptions upon which the " Sources of l

Funds" statement is based. These assumptions include, but are not Oif necessarily limited to:

(a) rate of return on average common stock

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equity; (b) preferred stock dividend rate; (c) long-term and short-term debt interest rates; (d) market / book ratio with respect to the projected common stock offerings; (e) common stock dividend payout ratio; (f) target and year by year capital structure; (g) resultant SEC and indenture interest coverages over the period of construction; and (h) annual growth rate in KWH eales and price per KWH. Provide a brief ex-planation of the basis for each assumption.

3 If nuclear fuel for the facility is to be acquired by lease or other

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other arrangement.

arrangement than purchase, briefly describe the terms of the lease or y

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Answer:

Y-The data requested is contained in the attached schedules.

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Davis-Besse Units 2 and 3 Financial Information o

l, Assumptions for Source of Funds Statement t

1.

By far the most significant assumption is that pertaining to additional rate relief. The 1978 figures shown un the attachment for item 3a reflects the full rate increase requested by Duquesne. For the years following 1978, it was assumed that sufficient rate relief will be t-granted to maintain adequate interest coverage under the indenture.

Being in the position of not knowing how much rate relief can be

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expected in the current and future years, it is most difficult to project financial conditions in future years as required by the tabulation.

2, 3.

Preferred / Preference Stock dividend rate = 9.0%.

4.

Growth in Kwh sales year 1978 - 4.9%.

y 5.

Bond Interes.t Rate 9/

1978 9.25%

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b 1979-1982 8.75%

w 6.

Inflation facto'r = approximately 8%

j5) 7-8, 9.

Target Capital Structure L

Bonds 50%

Preferred / Preference 13%

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Common Equity 37%

10.

Indenture interest coverage expected in 1978 = 2.70 m

d

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